Consider the following information: Sales: $950,000 Interest expense: 40,000 Variable costs: 270,000 Taxes: 84,000 Fixed costs: 400,000 If sales increase by 5%, what should be the increase in earnings per share? O 14

Finance Dec 24, 2020

Consider the following information: Sales: $950,000 Interest expense: 40,000 Variable costs: 270,000 Taxes: 84,000 Fixed costs: 400,000 If sales increase by 5%, what should be the increase in earnings per share? O 14.17% O 12.14% O 5.83% O 5.0% 8.17%

Expert Solution

rate positively .

	Old	Revised
Sales	950000	997500
Variable cost	270000	283500
Fixed cost	400000	400000
Interest expenses	40000	40000
Profit before tax	240000	274000
Taxes @ 35%	84000	95900
net income	156000	178100

Increase in EPS =	14.17%
178100/156000-1

ans=	14.17%

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